Amid official disclosures that Mexico's new ultra-leftist rebels are "urban terrorists" who may have financed an arsenal of modern assault weapons with tens of millions of dollars from a kidnapping ransom, the Mexican government wrestled Tuesday with a new setback in its effort to bring peace to the impoverished countryside.

Rebel negotiators reacted angrily Sunday to a government proposal that easing of tensions in the troubled southern state of Chiapas consist of gathering armed guerrillas into three camps. But they agreed to present the idea to their supporters. The government plan contrasted sharply with a detailed, 20-point rebel proposal. "We feel that the government delegates want to talk not about peace, but about surrender," Commander Tacho, coordinator of the ski-masked rebel delegation, told reporters.

Clearing the way for the start of peace talks between the government and the Zapatista National Liberation Army, hundreds of rebel supporters left the negotiation site Friday night, driven away by a severe thunderstorm and the pleas of their leaders. After the village center was cleared, eight ski-masked rebel delegates to the talks told an open-air news conference that they had asked community coordinators to take their townspeople home.

Cuauhtemoc Cardenas, the opposition standard-bearer, has become the first Mexican presidential candidate to meet with leaders of the Chiapas Indian uprising on their own turf--a decision that supporters acknowledged Monday was risky for his already flagging campaign. In this town at the edge of guerrilla-held territory, Cardenas stood on an open-air platform Sunday afternoon with the armed, masked leaders of the Zapatista National Liberation Army.

Subcommander Marcos, in an interview published Saturday, said the Zapatistas are ready to give up their military character in favor of the political process. "The movement has no future if its future is military," Marcos told Nobel Prize-winning author Gabriel Garcia Marquez and Colombian editor Roberto Pombo of Cambio magazine. "If the [Zapatista National Liberation Army] remains as an armed military structure, it will fail.

The Mexican government and rebel negotiators took a critical first step Monday toward settling the simmering conflict in the state of Chiapas, signing their first formal agreement since the two sides sat down together in April.

The music was off-key, the dancing and military maneuvers out of step, but the rhetoric was angry and stern as the Indian rebels celebrated the first anniversary of their New Year's Day uprising early Sunday with a midnight fiesta in the jungle and a call for a national struggle to drive Mexico's ruling party from power.

President Carlos Salinas de Gortari's government, struggling to put down a deadly Indian rebellion in southern Mexico, stepped up peace efforts Tuesday with a call for a truce and an offer to listen to the guerrillas' demands.

When peasant farmers invaded his ranch last year, Marh Kanter tried to do what his family had always done to protect its property: take it back at gunpoint. A peasant was killed by Kanter's gunslingers in the confrontation. Early this month, the farmers stormed into the town of Yajalon and killed Kanter. Neither side consulted with the police.

The death count exceeded 100 Monday on the third day of fighting between the army and Indian guerrillas who have captured and largely abandoned eight towns in the southern state of Chiapas. The guerrillas also have reportedly kidnaped the former state governor. The state's three Roman Catholic bishops are offering to serve as mediators between the government and the Zapatista National Liberation Army, as the guerrillas call themselves.